National Debt 2

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Tax Simple, Tax All The national debt stands at $15.4 trillion dollars, almost $50,000 per person, or more than $135,000 per  taxpayer; and r egardless egardless of whether that debt is considered “good” or “bad,” there are really only two avenues to reduction: (1) decreased spending and (2) increased revenues. Decreased spending can mean the loss of federally supported programs. Increased revenues can mean higher taxes. Economists often suggest simple and transparent tax structures which avoid providing loopholes. The conflict between the values of free markets, limited government, and self-reliance of Republican ideals and the need for  community,but, cooperation, and social welfare manageablecampaign when thethere economy prospered has erupted into warfare withthat the inspires economyDemocrats stalled.  Inwas stalled.  the presidential is talk, but not planning. What is clear is our present forms of big business and big government are outdated. Our tax system is a dumping ground for other people’s purposes. The 71,000-page tax code is overloaded with obscure but economically valuable tax breaks - a “land of opportunity”, forcing enormous time and effort (lobby money) to find and create loopholes. It’s a horrid corporate tax code where the official rate is higher than most countries but corporate taxes are under 7 percent when in the 1950s they were 30 percent. Lawmakers are against loopholes, unless, they create them. And then there’s Grover Norquist of  the no-tax pledge. Where are the solutions? Due to the world financial crisis, many economists, governments, and organizations re-examined, a financial transaction tax as the best tax for a modern world. This fair and equitable collection curbs financial markets volatility and is less susceptible to tax evasion than alternatives.The technology of payment processing is the key. All banks and many merchants and smart phones use these technologies now; why not the IRS? Globally, the move towards a centralized trading system means transactions are tracked by fewer and fewer institutions. Therefore, I believe in the replacement of our current system of individual and corporate income, sales, excise, capital gains, import and export duties, gift and estate taxes with a single comprehensive “revenue neutral” Automated Payment Transaction (APT) tax as proposed to Congress by Edgar L. Feige. (http://www.scribd.com/doc/25299549/Feige-APT-Presentation-to-Tax-Reform-Panel-2005 ) The APT tax consists of a flat rate tax levied on all voluntary transactions. The total volume of transactions represents the broadest conceivable tax base and therefore requires the lowest conceivable marginal tax rate. Since the inefficiency of a tax system tends to rise with the marginal tax rate, a massive reduction in rates can save almost $300 billion of current misallocation costs. APT tax is automatically assessed and collected when transactions are routinely settled through the electronic technology of the bank/payments clearing system with no deductions, exemptions, or exclusions. The APT tax also imposes an automatically collected tax on cash as it enters and leaves the banking system. For example, a transaction tax levy of  $.001 on every bank level or credit card transaction. If Bank A transfers $1,000,000 to Bank B with a .001 tax rate; the tax is $1000 Bank B books $999,000 or when Farmer Brown sells $1,000,000 worth of  produce, he banks $999,000. There is no paper work, no way to escape, no accountants, no lawyers. A million dollar income; $1000 tax! For businesses and individuals, all income and information tax returns are eliminated as taxes are digitally assessed and collected. States governments would not collect any tax revenue but would receive grants from the federal government designed to keep spending smooth across the business cycle. The annual savings in compliance and administrative costs is estimated at $200 billion per year. Unlike sales tax, value added tax or income tax, a transaction tax relates in some way to the service of  government: protection of property rights. Property rights theft is at a point of crisis. For that reason credit card companies can make a reasonable case that their fee is a kind of transaction insurance. This tax introduces progressivity through the tax base since the total volume of transactions includes all asset transactions involving exchanges of titles to property. The wealthy carry out a disproportionate share of  these exchanges and therefore bear a disproportionate burden despite a flat rate structure. Transfers to tax havens like the Cayman Islands could be penalized. The tax hits stock, commodity and currency gamblers and manipulators.

 

There are many examples of a single country applying a securities transaction tax unilaterally without significant capital flight to exchanges in other jurisdictions. Britain levies a “Stamp Duty,” and specific financial transaction taxes exist in Austria, Poland, Switzerland, Hong Kong, China and Singapore. Also, the relocation of a major entity to an offshore site would be expensive, risky and highly unlikely to avoid a small tax. What’s not to like? The proposed tax is simple, comprehensible, fair and efficient, with minimal administrative and compliance costs for governments, and individuals and greatly tax evasion, which the IRS estimates at $325 billion perbusinesses year. Scrapping the present taxwill system taxreduce promises benefits of nearly $1 trillion annually. The burden of proof therefore rests with politicians to demonstrate a system that exceeds the APT benefits.  benefits. 

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